Comparing LCOE across energy sources is absurd
Following is a short illustration about how absurd it is to compare different energy sources with the Levelized Cost of Electricity (LCOE) metric.
Imagine you are in the position to hire two employees. You have two choices; Nuke and Winston.
While they may initially appear similar, a closer evaluation reveals distinct differences that need to be taken into account.
Both Nuke and Winston demonstrate high levels of attendance, with Nuke being present 95% of the required time and Winston 97% of the time. However, their contributions vary significantly. Nuke consistently delivers 100% when at work, whereas Winston’s contribution can range from minimal to 100%, with an average of approximately 40%. This variability presents challenges in ensuring a stable overall contribution to the company, necessitating the need for a flexible consultant.
Fortunately, Winston updates his calendar for the coming week so you can plan for his varying contribution. Planning beyond the coming week is difficult though.
In contrast, Nuke offers some additional advantages for the company. Although not the most flexible employee, Nuke can adjust his output by up to 10% based on current work demand, even reducing it to 50% in scenarios with low demand.
Moreover, in an emergency case where the office wi-fi goes down he is able, with his black-start capabilities, to restart it. He also holds a strong “social inertia”, reducing mood swings in his team, ensuring everyone is on the same track.
It’s important to note that Nuke requires a long-term commitment from the entire company, as he retires at 80 but continues to draw benefits for several hundred years, which must be considered in the pension fund calculations.
Drawing a parallel between these employees, it becomes evident that comparing them solely based on the salary they demand would be absurd. Similarly, relying solely on the LCOE metric to compare different energy source technologies is flawed.
The LCOE metric fails to capture the nuanced factors, advantages, and disadvantages associated with each energy source, leading to an incomplete and misleading comparison.
